Senate OKs using Malampaya fund to lower electric bills

Senate OKs using Malampaya fund to lower electric bills

- in Consumer, Philippines
Consumers could soon enjoy lowered electricity bills thanks to the Murang Kuryente Bill. Image from

The Senate on Monday unanimously voted to pass a bill seeking to reduce electricity rates.

Senate Bill No. 1950, known as the “Murang Kuryente Act”, would utilize the Malampaya fund to pay the stranded debts and contract costs of the National Power Corp. (NPC), resulting in reduced electric bills for consumers.

According to Senate President Pro Temporte and primary author of the bill Ralph Recto, the national government’s net share from the Malampaya Natural Gas Project, amounting to P204 billion, may be appropriated to settle the stranded costs and debts assumed by the Power Sector Assets and Liabilities Management  (PSALM) Corp. from NPC.

The bill seeks to accomplish this by remitting the national government’s Malampaya fund share to a special trust to be administered by PSALM.

Consumers are currently bearing the burden of paying off NPC’s stranded contract costs. The Electric Power Industry Reform Act (EPIRA) defines stranded contract costs as “excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of such contracts in the market.” The same law defines stranded debts of the NPC as “any unpaid financial obligations of NPC, which have not been liquidated by the proceeds from the sales and privatization of NPC assets.”

These charges are passed on to consumers as part of the universal charges in electricity bills.

According to Senator Sherwin Gatchailian, the remaining debt of the NPC amounts to P466.2 billion. If the Malampaya fund is not tapped to address this, the universal charge paid by consumers could increase in coming years.

Currently, the universal charge is set at PHP0.8600 per kilowatt hour from 2020 to 2026. Gatchalian cited cash flow projections from PSALM showing the necessity to collect the charge in order to address the large NPC debt.

Gatchalian said that the additional charges equate to around P172 per month for an average household, which the Senator said could be “used to buy two to three additional kilos of rice”.

Tapping the Malampaya fund could save consumers as much as P169.48 per month or around P2,000 pesos per year.

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